Research On The Employment Effects Of Minimum Wage Standard Of Shanxi Province

Abstract:With the rapid development of national economy, the average wages as well as the living standard all over the country have been greatly improved. In order to benefit all strata, Chinese government is prone to indemnify the interest of low-income group. The promulgation of The Labor Law of the People’s Republic of China, in July1994, indicated that the minimum wage regulation was affirmed in legal form. On March1,2004, former Ministry of Labor and Social Security released Minimum Wages Regulation, which was followed by all provinces and municipalities. The regulation makes it clear that the minimum wage should be altered every second year. Now, all provinces give more weight to the measurement and enactment of minimum wage standard and also see frequent adjustment in recent years. For instance, during the whole year of2011,24provinces in China raised the minimum wage, which shows an average growth rate of22%. In2013,26provinces raised the minimum wage, with an average growth rate of18%.However, the increase of minimum wage standards sacrifices the enterprise cost, which then causes the reduction of labor requirement. From this point of view, minimum wage has negative influence on employment. Nowadays in China there have been many researches about employment effects of minimum wage, even in academic world. However, the conclusions of these researches are quite different, whether in terms of working groups, in terms of districts, or in terms of the effects of minimum wage of different industries. As the country’s energy and heavy chemical industry base and a national resource-based economy comprehensive reform pilot province, Shanxi is seeking economic transition and structural adjustment. There is a big difference in industrial structure and development emphasis between Shanxi and other provinces. The employment effects of the minimum wage standard will exhibit differences from other provinces, therefore, the research about the minimum wage in Shanxi helps eliminate the negative effects caused by the minimum wage system and promote the harmonious development of the minimum wage system and employment. At last, the research provides a theoretical reference for the healthy and stable development of the regional economy in Shanxi Province.Based on the theories about minimum wage standard and the related employment effect, the dissertation firstly analyzes historical evolution and current situation of the minimum wage standard in Shanxi, which is compared horizontally and vertically, and finds out the features of minimum wage in Shanxi and the existing problems. Secondly, the dissertation makes a study on the employment effect of minimum wage in Shanxi by the methods of co-integration theory and vector error correction model (VEC). Thirdly, the dissertation conducts the study on the different employment effects of minimum wage in three different industries:construction, manufacturing, and mining industry. Finally, by analyzing the problems above, the dissertation proposes suggestions so as to perfect the minimum wage system in Shanxi, even in this country.